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Coinstar: Rubi and Redbox Tickets a benefit to retailers

In a world where convenience is king, one company is staying au courant by finding ways to vend the less traditional — increasing retailers' customer traffic and stepping on the toes of a few industry powerhouses in the process.

Redbox, parented by Coinstar, could soon morph its DVD persona into an all-inclusive entertainment source with the launch of Redbox Tickets. And coffee shops beware, Redbox's Rubi coffee kiosk will be arriving at retailers to serve up freshly brewed cups of coffee to the tired and thirsty.

Coinstar is no stranger to identifying market opportunities and capitalizing on consumer needs. The Redbox DVD rental kiosks have reshaped the home entertainment industry — for better or worse depending on whom you talk to — and Coinstar's recent investments in the electronics recycling ecoATM kiosks and the SoloHealth wellness-screening kiosks only add to the company's far-reaching repertoire.

Redbox Tickets

With Redbox entering the event ticket industry, the company positions itself to become an alternative to Live Nation and Ticketmaster, an event promotions merger that has cornered the market. Although still in its infancy, Redbox Tickets will operate on the premise of lower ticket fees which, in turn, could sway more business away from Ticketmaster once existing contracts expire. Currently, Ticketmaster fees account for nearly 50 percent of the ticket price, according to the company's Wikipedia page.

Redbox Tickets is just now rolling out at existing Redbox kiosks in the greater Philadelphia market, with plans to roll out in Los Angeles early next year. According to Marci Maule, Coinstar's director of public relations, the ticket venture is not meant to be a blow to its main competitor, even though the company does see an opportunity to replicate the business across the country.

"Redbox fans crave entertainment, and we're always looking for ways to satisfy their needs in a simple, convenient and value-driven manner," Maule said. "Live event ticketing is an attractive market opportunity, there is no single player that owns the market, and we believe we can simplify the consumer value proposition with a flat $1 fee."

Maule explained the benefit to retailers offers great potential as well, as a means of driving foot traffic to their stores. Local retailers can turn into "a destination for discovery of great local events," she said.

Another advantage to the ticketing venture is its seamless integration into Redbox's already established DVD kiosks, requiring little in terms of system alterations. New Era Tickets and Sparkart are key launch partners of Redbox Tickets, according to a Redbox press release. New Era Tickets and Redbox have collaborated to enable New Era Tickets' ticketing clients to print Redbox Tickets at home.

"Most of our development work went into the creation of our own ticketing platform for our partners to use," Maule said. "It includes a set of APIs that allows any ticketing system to connect directly with Redbox. The ticketing platform then seamlessly merchandises the relevant event inventory on local kiosks, as well as across our Web and social presence."

Soheil Samimi, president of the DVD kiosk company iMozi, agrees that the ticketing integration with existing kiosks is a profitable development track for the company that will incrementally add revenue generating services.

"We have always believed that one of the best long term potentials of Redbox, and the vision of what many fail to see beyond DVD, is how the kiosks can be used as a Trojan horse for launching new software-based services to the millions of customers, at low costs to the company overall," Samimi said.

Rubi coffee kiosks

According to the National Coffee Association, the out-of-home coffee market sits near $28.5 billion in the U.S., with more Americans drinking coffee than soft drinks. This is where Redbox hopes to fulfill an unmet consumer demand.

An initial deal for kiosks is set at 5,000 units around the country, according to an article on the website seekingalpha.com. If the initial launch is a success, Coinstar could expand that figure to 15,000 nationwide. Machines will be found at drug stores and big box retailers, with an emphasis on stores that do not already have a coffee store inside, the article reported.

Maule explained that Redbox created the Rubi coffee kiosks for two key reasons: First, coffee drinkers have elevated expectations for a quality product, along with value and availability. With Rubi coffee kiosks located in places people go regularly, availability is no longer an issue. Second, retailers struggle with profits on coffee options and often lose money throwing away more coffee than they serve. Rubi kiosks can offer profit on every cup and eliminate labor, with no ordering of parts, cleaning or stocking required.

"We have spent countless hours designing Rubi to be a completely turnkey solution for retailers," Maule said. "Rubi coffee kiosks have a constant wireless data connection which allows Coinstar employees to remotely monitor systems and deploy a field technician to replenish supplies. Other than [an] occasional counter wipe, our retailers don’t need to do anything."

The interesting side note to the premise of Rubi kiosks is the seemingly contradictory partnership with Seattle's Best coffee, a Starbucks-owned brand. Starbucks is the expensive, less-convenient coffee offering that Rubi positions itself against. However, Seattle's Best recently lost 500 in-store locations with the closing of Borders bookstores, so Starbucks still stands to gain from the partnership in terms of Seattle's Best brand awareness.

In a press release when Rubi was announced, Jim McDermet, senior vice president and general manager of Seattle's Best Coffee, said, "This relationship is a logical next step in our strategy to bring great coffee to new and unexpected locations where it's traditionally been hard to find great coffee."